The rich must have started working much harder in 1980

[cthulu2016]

Everyone knows that the rich are rich because they work so much harder than everyone else. I hear it on TV every day!

They must have started working super-hard around 1980. How else to account for this?


Chart from:
http://krugman.blogs.nytimes.com/2012/01/14/things-were-supposed-to-be-quiet-about/
(This post is not Krugman's words. Only his chart. Don't blame him for whatever I say.)

Average people simply stopped sharing in the economic growth of the nation circa 1980.

A few points:

1) If everyone on the bottom 80% of the economy received a 50% pay raise tomorrow we would still have less "rising tide lifts all boats" than in the 1960s.

2) Take the Clinton presidency out of the mix and the median family income today would be about where it was in 1980.

3) Our method of restraining inflation is to restrain wages, and it works... if you don't care about wages. No wages, no wage/price spiral. 1980-2012 is a low inflation, low wage economy quite different from the previous higher wage inflationary 1930-1980 economy that created the American middle class. Inflation is a leveler. It's greatest effects are on idle capital. (When money becomes less valuable it most hurts people sitting on stacks of money.)

4) Since 1980, only the rich have recovered from recessions. Each substansial downturn ('82, '92, 2001, 2008) is like a pry-bar increasing income inequality in a way that does not correct in the "recovery"

[Peregrine Took]

1. Aha....1980. Year of King Ronnie's election. The year the rot began... n/t

[Octafish]

2. No, they bought government and have been harvesting the returns on their investment.

Master of Trickle Down Pruneface and his descendunces in the Oval Office did their bidding in the form of tax breaks for the rich and increased spending on the very industries they owned. Budget deficits ballooned, the rich, again, cashed in by owning the bonds Uncle Sam pays interest on. So, over the last 32 years, they made out like bandits. The rest of the nation became the mopes.

Even David Stockman noticed at the time.

He brought up how most of the wealth in human history has been created since 1980. Guess who got the lion's share of that?

[mainer]

3. Well, in hours worked per week, it's actually true

According to the NYT article just posted here on DU, the top 1 percenters (by income) are more likely to work more than 50 hours per week.

added link from another thread:

http://www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html?pagewanted=1&_r=1&hp

[cthulu2016]

4. two points

the employed are, by definition, likelier to work 50 hours/week than the under-employed. Working 50 hours a week is something many millions of people are trying to do, but cannot.

Also, there are real cost/benefit considerations. That is to say, more people will work Saturday for $1000 than will work Saturday for $80.

[mainer]

6. And there's also a big difference between working for yourself and working for a boss

Working for yourself is always more satisfying. Even if it does mean long hours.

[cthulu2016]

7. Very true.

On freelance projects with a decent rate of pay I have been known to work myself to the brink of collapse without minding it.

Punching a clock at a normal job, not so much.

[da_decider]

5. Reagan: an actor trained like a monkey to lie

"Trickle Down economics was a Trojan Horse".
- David Stockman, Ronald Reagan's budget director!

[Yavin4]

8. Death of Unions Is The Reason for the Wage Gap

Without the unions actively bargaining for better wages, corporate America has no reason to raise wages.

[cthulu2016]

9. Yes. (And unions were a prime driver of inflation.)

I get so frustrated with the success of the RW brain-washing on the topic of inflation.

Putting more wealth into circulation is inflationary.

COLAs are inflationary, whether in government benefits or union contraats.

Higher wages are distinctly inflationary.

Working people do much better in inflationary environments than the alternative but the average American worker has been conditioned to see inflation as her greatest enemy.

And the message/reality that wages will never go up enforces that.

By conflating inflation and energy costs (which are bound to go up more than inflation in the long term) the RW has convinced the average person to want an environment that only really benefits holders of debt. (And fails to punish money-hoarders.)

[Yavin4]

10. We Have Inflation (in some cases HyperInflation) with Flat Wages

Yes, you can buy a flat screen relatively cheaply, but compare the prices of housing, healthcare, education, energy, and food today to what they were 40 years ago. All have increased exponentially while wages remain flat.

[cthulu2016]

11. That's partially, but not entirely true

The componded CPI since 1980 is almost exactly 300%.

A gallon of milk cost 1.70 in 1980.
The average new car was $7800.
A gallon of gas was 1.25.
the average new home was $76,400.00.

These things are not out line with base inflation. They seem to be because people don't make very much money today.

Higher education is a genuine runaway inflation deal, particularly since the $$$ value of the education is lower. Higher education is INSANE.

Healthcare has gone up a lot, but there is an apples and oranges problem. The cost of 2012 healthcare would have been infinity in 1980 since half the drugs and procedues we take for granted did not exist. In 1980 few people were on daily prescription drug regimens. Today almost everyone is. We do procedures like heart stents and hip replacements as a matter of routine. Healthcare is definately an area of wildly above-trend total-cost increases, but it is not so easy to separate out. For instance, the cost of cataract surgery is lower today and the results are much better. On the other hand, a lot more people get the procedure. Individual cost down, value up, aggregate cost up.

housing - not really (Apples to apples perhaps lower or higher... what was standard in a new home kitchen in 1980? Not much. On the other hand, the construction was "heavier" in 1980. etc.)
healthcare - yes, very much but with apples to oranges problem
education - insane inflation. A major problem
energy - cheaper than in the 1970s, adjusted for inflation
food - apples to apples, (so to speak) not out of trend.

We have had an illusion the last two years of global comodity price increases being out of line with US GDP growth due to increasing competition from China and India, but demand-driven comodity spikes are not true inflation.

The median househol income in 980 was $17,710. In 2010 it was $49,445. So even that is in-line with inflation. But GDP has increased a lot more than inflation without raising median income above inflation. Income distribution has become much more skewed.

And since higher education and healthcare are (in effect, even if not always apples to apples) well above trend then people have fallen further behind.

The stock market has gone up at triple the inflation rate since 1980 so people with money have kept up.

Of course I agree that people have fallen further behind -- I'm just not citing food, housing and energy. It's education, health and income distribution